The strong demand for crypto-based ETFs brought new products, including a recently filed basis trade ETF for BTC and ETH. Defiance, one of the current ETF issuers, has filed with the US SEC for two additional ETFs tapping the basis trade.
The ETF market will offer more complex products, as the carry trade strategy is packaged for crypto investors. Defiance Investments, an issuer of diverse ETFs, has filed for two new products built around the basis trade, tied to BTC and ETH.
The two new ETFs aim to automate the strategy of profiting from the price gap between crypto spot markets and futures. With permissionless crypto, investors can buy the spot asset, sell a futures contract, and profit from the difference, depending on the spread. As crypto is a smaller market, the disparity between spot and futures can be significant.
Defiance has already proposed the NBIT and DETH tickers for its ETF and ETH products. The newly launched entities will wrap the basis trade into a single purchase, simplifying the investment. For investors, this approach would be easier than buying a spot ETF like IBIT, then shorting BTC on the CME. The Defiance products may offer the same return.
‘It brings a relatively advanced strategy into ‘one-click’ for individual investors,’ said Steve Sosnick, chief strategist at Interactive Brokers, cited by Bloomberg. ‘The ETF space has gotten so saturated that people need to think of ways to be more creative — and this is a subtle trade, which to me makes it quite interesting.’
As crypto adoption widened, the basis trade drew in more funds, crypto-native desks, and native investors. The Defiance ETF will also approach retail directly, with reduced administrative and trading costs.
Defiance’s ETF depends on a bull market
Defiance’s ETF strategy is successful during a bull market with a clear direction, where premiums on futures are usually high. In 2025, the carry trade has been profitable for the bulk of traders.
The opportunity for tapping a futures premium depends on the markets, as some exchanges offer higher risk and more lucrative futures premiums. During peak market exuberance times, premiums on futures markets rose as high as 20%.
BTC premiums on futures against the spot market are consistently high for BTC | Source: Coinglass
ETH premiums are more unpredictable, but also offer potential earnings. Ethereum’s markets also often have futures prices below the spot market, breaking down Defiance’s strategy. However, on a long-term scale, both assets are retaining their bullish direction.
The basis trade and the overall bullish trend are also what made Ethena’s strategy work, as a crypto-native project.
Can CME achieve robust crypto earnings?
The carry trade has been tried and tested in the crypto space, especially utilizing native markets like HTX, OKX, and Binance. However, a regulated product may have to use the CME futures market, which does not offer the same volatility dynamics.
The institutional trading has wiped out some of the inefficiencies that allow crypto natives to tap the price difference between spot and futures. While spot traders on Binance can easily tap the exchange’s futures contracts, Defiance will have to achieve a similar result using the more liquid and efficient regulated ETF and futures markets.
